Coupons are a widely used sales building tool for consumer products or services. These coupons generally give a reduction in price, or are redeemable for part of the purchase price and/or offer free samples. In 1990, 276 billion coupons were distributed in the United States. The coupons were redeemed at a value of $3.5 billion but redemptions represented only 21/2% of those issued.
Coupons are distributed through high volume channels by mail, in products, on product packages, on pages in publications and newspapers, and as free-standing inserts (FSI). The most common distribution channel is the Sunday newspaper by FSIs which accounts for over 50% of all coupons issued and 70% of all redemptions. A growing problem is the mis-redemption of coupons. Mis-redemption problems include allowing redemption without purchase (64%) and discount allowed for the wrong product (19%) resulting in an accumulated cost estimated to be $315 million annually because of mis-redemptions.